Estate Planning for Children

Guardianships for minor children

A guardian for a minor child may be appointed by a parent’s Will or other signed writing. If a parent nominates a guardian in a writing separate from the parent’s Will, the writing must be signed by the parent and at least two witnesses with all three signatures being notarized. The appointment of the guardian becomes effective upon the death or incapacity of the appointing parent, but it must be confirmed by the court.

A child over the age of 12 must consent to the guardian. If the child does not consent to the person nominated by his or her parent, then the court will choose the guardian.

Absent extreme circumstances, if a child has a parent living, then the child will be placed in the care and control of the living parent, even if the deceased parent nominated some one else as the guardian. If you do not want your child’s other parent to have care and control of your child in the event of your death, you should discuss this issue with an attorney.

Conservatorships for minor children

A conservator is a person appointed by a court to manage a child’s financial affairs. A conservator owes a fiduciary duty to the minor child, meaning he or she has a legal obligation to use and protect the minor child’s money in a fiscally responsible manner on behalf of the child.

When might a child need a conservator?

If a minor child inherits money in excess of $11,000, Colorado law requires a court appointed conservator to hold and manage the property for the benefit of the minor child until the child is twenty-one (21). Similarly, if a child is listed as a beneficiary of a life insurance policy, a life insurance company will require that a conservator be appointed prior to the payment of the policy proceeds. Additionally, real estate or other titled property cannot be sold by a minor, and therefore any real property in an estate that is to go to a child will need to be sold by a court appointed conservator and the proceeds then retained for the minor child in the conservatorship.

Who would act as a child’s conservator?

In appointing a conservator, a court will look to the following people, in the following order:

  • A person appointed a conservator or guardian of the child in another jurisdiction
  • A person the minor child picks, if the minor child is at least twelve years old
  • The parent of the minor child
  • An adult with whom the child resided for more than six months immediately before the filing of the petition for a conservatorship.

Despite these priorities, a court can decline to appoint someone with priority for good cause. If you are concerned about your child’s other parent managing your child’s money in the event of your death, you should discuss this issue with an attorney.

Trusts for minors

A trust for a minor can either take effect during a parent’s lifetime or after the death of a parent. The trust can be revocable, giving the parent the ability to take assets out of it during the parent’s lifetime. The trust also can be irrevocable, meaning the parent cannot take assets out of the trust after they are placed in the trust.

The assets that the parent leaves to the child in the trust are managed pursuant to the trust document by a trustee who is appointed by the parent, not by the court. The parent can also nominate successor trustees in case the original trustee can no longer act.

A trust offers parents flexibility regarding when the trust assets will be distributed to the child outright. A trust can dictate that the child will receive all of the remaining assets at one certain age, or that the child receive a portion of the trust assets at different ages, or that the child only receives trust income.

Some trust documents state that the trustee can make a final distribution only upon some happening, such as graduation from college. Other trust documents will allow the trustee to withhold final distribution from a child who does not appear to be able to handle those funds in a mature manner and some only allow the child to make use of the trust assets during their lifetime, and never to own the assets outright.

If a child inherits money, and that money is held in a conservatorship, the child will receive the money outright at age 21. Some parents create a trust so that the child receives an inheritance later.